Markel gets Q4 reprieve on capital flight: Nephila AuM flat at $6.8bn

Markel stemmed the reduction in assets under management at its ILS management unit Nephila in the fourth quarter after heavy Q3 outflows, holding AuM steady quarter to quarter at $6.8 billion. 

Assts under management at Nephila are now down nearly 31% from the Q2 2021 peak. 

The third quarter had shown heavy outflows of capital freed from side-pockets:  AuM went down to $6.8 billion from the $7.2 billion level at which AuM had held steady since the major hit taken in Q4 2022 after hurricane Ian. 

The fourth quarter could yet have seen some continued minor outflow of once-trapped capital, covered by a rise in asset valuations. A comparison of management statements on Nephila operating revenue left open the possibility that fees from such movements had extended into the year’s final quarter. 

Management attributed $31.1 million of full-year 2023 Nephila management fees to moneys taken on the release of capital from side pocket reserves. Management had noted $29.5 million of such in the Q3 report when AuM shot down. Reports in H1 had not called out the position. 

Markel otherwise provided no Q4-only operating revenues and costs for Nephila. Full year 2023 ILS revenues of $97.6 million and costs of $76.0 million were both well down on the prior year period, skewed by the sale of MGA units in 2022. 

Full-year growth in Markel program services and fronting operations, however, was attributed in part to “expansion of our property catastrophe programs with Nephila Reinsurers” as well as growth from a new specialty program at Nephila.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.